IBM, Five International Banks Pilot Blockchain-Based Platform for Trade Finance

Batavia, a global trade finance platform based on distributed
ledger technology (DLT), which has been jointly developed by a consortium
consisting of IBM, Bank of Montreal, CaixaBank, Commerzbank, Erste Group and UBS, “has
successfully completed its first live pilot transactions with corporate
clients.”

“The complexity of today’s global financial systems is making it
more important than ever for networks of institutions to work together with
their clients to efficiently and securely share trade data,” said Jason Kelley,
general manager of IBM Blockchain Services, in the company’s press release
announcing the pilot. “The members of Batavia have demonstrated how sharing
data among permissioned network members can accelerate cross-border trades and
bring new transparency to the financial system, both in real-time and at
scale.”

“Batavia is built on the IBM Blockchain Platform, powered
by The Linux Foundation’s Hyperledger Fabric.” Batavia
wants to provide a foundation for a future trade finance ecosystem, with
end-to-end support to trade processes, including the closing of trade
agreements and the execution of smart payments triggered by predetermined
events in the supply chain, recorded on the blockchain. The Batavia platform is
also able to integrate tracking, tracing and risk management tools, “which can
be tied to key events in the supply chains and signals from IoT devices.”

The first pilot transactions included the trading of cars from
Germany to Spain and raw textile materials for furniture production from
Austria to Spain. The banks collaborated among themselves and with corporate
clients that are active in international commerce, including textile operators Lenzing and Fluvitex, car maker
Audi and car
importer Domingo
Alonso Group, to test the behavior of the platform in complex real-world
supply chain monitoring, trade data gathering and trade finance scenarios. The
pilot transactions were conducted with a variety of transportation modes,
geographies and trading parties of various sizes, in order to test Batavia’s
ability to scale and manage diverse transaction types.

“The first live transactions involving corporate clients mark a
real milestone in Batavia’s development and underscore the immense potential of
this global trade platform,” said Patrick Götz, the head of corporate flow products
at the Vienna-based Erste Group Bank AG, per the bank’s pilot press release.
“Erste Group is grateful to its corporate client Lenzing AG and their
subsidiary company Lenzing Fibers GmbH, as well as to its fellow Batavia
participant CaixaBank, for successfully cooperating on one of these pilot
transactions.”

In its release, CaixaBank espoused blockchain technology’s ability
to improve services for customers and increase transparency, traceability and
risk management, all of which are paramount for successful international trade
management.

“It is very important to involve our corporate clients as early as
possible in our research and development activities regarding the digitalisation
of trade finance,” said Niko Giesbert, divisional board member at Commerzbank,
in that bank’s release. “I am very grateful to Audi for their cooperation and
their support for our project.”

Giesbert added that, in the pilot, a smart payment was
automatically triggered by shipment data, which shows the potential of the
Batavia platform.

“In cooperation with Commerzbank, we have processed a worldwide,
blockchain-based commercial transaction through the Batavia platform for the first
time — efficiently, safely and transparently,” said Alexander Dietlmeier, head
of group treasury at Audi, per the Commerzbank release. Dietlmeier added that
Audi has gained important experience and will be testing blockchain technology
for other use cases in its distribution process.

The press releases issued, to date, by IBM and four of the five
participating banks, state that Batavia has the potential to revolutionize the
client experience by providing a digital and automated way of arranging,
securing and financing international trade transactions. The Batavia project is
now planning to start a new development phase to build a production-ready
solution.